An expert in financial and securities law says he’s “skeptical” New York Attorney General Eric Schneiderman can build a strong case against Exxon Mobil for fraud and deception.
Merritt Fox, a Michael E. Patterson professor of law at Columbia Law School, told a Columbia Law School panel in May he believes Schneiderman’s investigation into Exxon is unlikely to bear fruit, as the oil company, he said, does not appear to have broken the law.
A video of the panel and transcripts of the conversation were made available to the press Tuesday.
Fox, who is also an expert on financial law and securities, told the crowd the Martin Act, which allows New York’s head law enforcer to investigate and eventually prosecute companies for committing fraud, probably shouldn’t be used to punish Exxon.
Schneiderman began his Exxon investigation in November, which, according to a New York Times report at the time, was “demanding extensive financial records, emails and other documents” from the oil producer dating all the way back to the 1970s. The New York attorney general also demanded information on global warming skeptic groups Exxon had once helped fund.
The law requires the likelihood that a reasonable investor would consider the omitted important information and decided “not to vote or buy, sell, or hold, and that it has to significantly alter a total mix of information available to this reasonable man or reasonable investor.”
But since “the market was well supplied with information about climate change,” he added, “It’s not, I don’t know what the documents would discover, but I’d be kind of amazed if what the Exxon scientists knew was so different from what other scientists outside Exxon knew and were publicly available that it would change that total mix in a significant way.”
Since information was already easily acquired using a computer, television, or some other tool, according to Fox, then whatever data Exxon chose to hide or withhold was not “material,” or likely to affect the decision-making of its investors.
Fox said he’s still critical of Exxon, and the fossil fuel industry in general, but he maintains that the company may not have engaged in fraud.
He added: “And so, I’m certainly concerned about Exxon’s role in our future, but I wonder about the use of the Martin Act.”
Schneiderman’s office told Texas Republican Rep. Lamar Smith in May the New York attorney general would not provide the House Committee on Science, Space and Technology, which is chaired by Smith, with documents associated with claims Exxon duped the public and its shareholders about internal research on climate change.
“Our investigation seeks to ensure that investors and consumers were and are provided with complete and accurate information that is indispensable to the just and effective functioning of our free market,” Schneiderman letter noted.
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